MercoPress. South Atlantic News Agency

Massa clinches deal to curb price hikes

The cost of the devaluation cannot be paid by the people, Massa argued

Argentine Economy Minister and presidential hopeful Sergio Massa Friday announced an agreement with most leading supermarket chains and wholesalers for 90 days, during which prices will remain frozen in principle for some 52,300 mass consumption products and increases will be capped at 5% per month, it was reported in Buenos Aires.

In exchange, the companies agree to tax benefits to prevent an increase in costs passed on to consumers. Those who fail to honor the deal would lose their tax benefits, it was explained.

“Argentina has experienced in the last five days situations of instability,” Massa said during Friday's announcement. “The IMF forced Argentina to devalue in order to proceed with the disbursement program. This devaluation generated distortions and changes in the equation of prices and companies and generated some level of difficulty and uncertainty for citizens and SMEs, but also for large companies,” he added.

“Since Wednesday, we faced an agreement procedure to provide certainty and we met with the largest wholesalers and supermarkets from all over the country, not only from the metropolitan area,” Massa also pointed out while suggesting small businesses buy from wholesalers joining his program so that the government's guidelines can be followed.

“There will be tax benefits designed for those who make their purchases in formal markets because not only will they have a respected price path with guaranteed supply, but they will have the opportunity to access tax benefits on mass consumption products,” Massa also said in a broadcast message.

“Beyond the 22.5 percent devaluation that the Monetary Fund imposed on Argentina, that cost cannot be paid by the people,” the minister also pointed out. Massa this week insisted his main concern was to stabilize the situation to make up for “the damage that has been generated by the devaluation”.

In this scenario, the “blue” (a euphemism for “black market”) dollar fell AR$ 40 Friday, closing at AR$ 720 ahead of the three-day weekend. Monday is a national holiday in Argentina. The US currency reached an all-time high of AR$ 780 on Wednesday. It now accumulates a rise of AR$ 374 so far this year after closing 2022 at AR$ 346.

Meanwhile, the credit card dollar for transactions abroad with a 30% PAIS tax and a 45% collection on account of the income tax stood at AR$ 641.50 while for operations above US$ dollars, which have an additional 5% surcharge, it was quoted at AR$ 659.83.

On Friday, the Central Bank (BCRA) purchased US$ 11 million in the Single and Free Foreign Exchange Market (MULC) for a weekly positive balance of US$ 658 million and US$ 797 million this month.